This copy is for your personal non-commercial use only. To order presentation-ready copies of Toronto Star content for distribution to colleagues, clients or customers, or inquire about permissions/licensing, please go to: www.TorontoStarReprints.com

Income redistribution, Harper-style: Goar

Stephen Harper says his government is going ahead with a promised income-splitting measure for families with kids under 18. The prime minister says the 'family tax cut' will allow savings of up to $2,000.(The Canadian Press - News (En))

The tax cuts and children’s benefit top-ups that Prime Minister Stephen Harper announced last week will eat up $27 billion. That is approximately the amount the federal finance department is projecting in annual surpluses from now until 2018.

Canadians sacrificed a lot — public services and programs, reliable statistics, environmental safeguards, up-to-date infrastructure and a human voice on the phone — to create this pool of black ink. And now without public or political debate, it’s gone.

Is this how Canadians would have chosen to spend their surplus?

For about 15 per cent of the population, the answer is an enthusiastic yes. These taxpayers — typically high-earning breadwinners with stay-at-home spouses and kids — will receive an average of $1,140 more a year in tax relief and children’s benefits.

Article Continued Below

For 12 per cent of Canadians — single parents and working parents in similar tax brackets — the answer is an equivocal yes. They’ll get an additional $615 a year in children’s benefits, but no tax reduction.

Prime Minister Stephen Harper's proposed tax breaks will exhaust the federal surplus while benefiting only 15 per cent of Canadians, the majority of whom are relatively affluent, writes Carol Goar. (Adrian Wyld / THE CANADIAN PRESS)

For the remaining 73 per cent of the population — couples without children, parents of children over 18, young singles and pensioners — the answer ranges from an altruistic maybe (in the case of grandparents) to a flat no (in the case underemployed youth). They will get nothing,

What this amounts to is a massive income transfer wrapped in child-friendly language.

“Our government is utterly convinced of one thing: when it comes to the cost of raising a family Canada’s moms and dads deserve all of the help that we can give them,” Harper said.

But not all of Canada’s moms and dads:

The lion’s share of the $27 billion will go to better-off families. They’re the only ones who can afford the “traditional” model of child-rearing in which Dad works, Mom takes care of the kids and one income supports everybody.

A disproportionate percentage will go to parents in Alberta and Saskatchewan, where one-earner families are more common than in eastern Canada. According to the Broadbent Institute, which analyzed the regional impact of Harper’s plan, 22.8 per cent of families with children in Alberta are eligible for the maximum benefit compared to 13.8 per cent nationally. Just 7.4 per cent of Quebec families with children qualify for the full benefit. (Ontario is in the middle at 14.1 per cent.)

Parents in their late 20s and 30s, who set aside money to start a family, will do better than their younger counterparts who need two incomes.

And families with grandparents nearby who can take care of the children will be at an advantage. This arrangement allows one parent to work part-time while the other maximizes the family income.

In all cases, tax dollars flow from the majority of Canadians to a well-off minority.

To forestall criticism, he capped the tax benefit at $2,000 and supplemented it with a $60-a-month increase in the Universal Child Care Benefit and a new allowance for children 6 to 17. These measures made the proposal more politically palatable, but did not address its fundamental inequity. As Liberal leader Justin Trudeau pointed out, families like his — the Liberal leader’s wife, former television host Sophie Grégoire, is now a full-time homemaker — would get the maximum benefit but families in need would not get much help.

Moreover, the cost of the package will increase Ottawa’s fiscal vulnerability. If revenues fail to meet the government expectations — which is quite conceivable in the light of the 29 per cent drop in oil prices in the last five months — Harper’s tax breaks and children’s benefits could tip the budget back into red ink. It depends how much padding the government built into its projections.

Superficially the Tory payout has a lot of appeal. Nothing speaks as loudly to voters as cash.

But draining federal coffers precludes badly needed investments, not just in child care but in urban transit, affordable housing, pensions, help for workers supporting aging parents and sustainable energy.

That is the real choice in 2015: selective tax relief or a platform that works for everyone.

More from the Toronto Star & Partners

LOADING

Copyright owned or licensed by Toronto Star Newspapers Limited. All rights reserved. Republication or distribution of this content is expressly prohibited without the prior written consent of Toronto Star Newspapers Limited and/or its licensors. To order copies of Toronto Star articles, please go to: www.TorontoStarReprints.com